We’re going to use this space to talk about personal finance, and we’ll emphasize the personal as much as the financial.
Here’s why: The good and bad habits you develop in the rest of your life are likely to determine, for better or worse, the way you manage your money.
If you take care of your body, you’ll probably take care of your bank account. If your life is balanced, your checkbook probably will be, too. And if you surround yourself with smart, supportive friends, you’ll probably find your way to smart, supportive financial advisers.
But if you can’t open a new pint of Haagen Dazs and put it back in the freezer before you finish it…
Or if you can’t leave a bar before the bouncers start stacking stools at closing time…
Or if you’ve just got to buy that refurbished Hummer, even thought your license was suspended six months ago…
Or if your life has turned into one long, sad pageant of crazy roommates, eccentric frenemies and bad boyfriends…
Then you have some issues with self-discipline, judgment, impulse control and deferred gratification–all of which are essential to the lifelong job of spending and investing your money wisely.
Managing your money, like life in general, is not meant to be a joyless slog of perpetual self-deprivation. We’re all entitled to indulge in the occasional pint of ice cream or bad boyfriend.
And we can enjoy spending some of our hard-earned (or unearned) money today without wrecking our plans to become financially secure for the long run. But taking care of our money, like everything else important in life, requires some real work and self-discipline. And we all know in our heart of hearts when we’re being slack.
The fundamentals of financial planning aren’t that complicated–although some financial advisers try to make them SOUND complicated, for obvious reasons. You already know some basic rules: Spend less than you earn. Don’t invest in something you don’t understand. Don’t bet more than you can afford to lose.
We’ll start talking about more specific financial recommendations next time. Here are a couple of suggestions for you in the meantime:
- Take a sheet of real or virtual paper and make a full accounting of every dollar you’ve spent in the past month. Divide your expenses into categories: housing, transportation, food (groceries and restaurants), drink, clothes, health and fitness, drugs, personal hygiene and grooming, etc. And don’t forget the money that mysteriously disappeared from your pocket the last time you closed down that bar. The results may surprise you–and if you can’t account for how a good chunk of your money was spent, then that’s a problem in itself.
- If you carry a monthly balance on your credit card(s), start paying it down as quickly as you can, even if it requires some of that dreaded self-deprivation. Unless you’re in hock to your neighborhood loan shark (in which case you’ve come to the wrong column), your credit cards probably represent the highest interest rate you’ll ever be stuck with. Pay it down. Don’t be a sap.
- And go easy on the Haagen Dazs.